BofA's Hartnett Warns Off Bonds as US Debt Nears $40 Trillion
Updated
Updated · Quartz · Aug 14
BofA's Hartnett Warns Off Bonds as US Debt Nears $40 Trillion
3 articles · Updated · Quartz · Aug 14
Summary
Michael Hartnett told investors to avoid bonds as U.S. national debt approaches $40 trillion, extending Bank of America's “Anything But Bonds” stance into a market still pushing equities to records.
Hartnett said the financing burden is worsening fast: interest payments hit $1.4 trillion over the past year, and he sees debt reaching $50 trillion by July 2029 unless five-year Treasury yields fall below 3.25%.
The warning comes as fiscal strain deepens. July posted a record $432.3 billion deficit, with total outlays up 22% year over year to $766 billion and net interest alone adding $104 billion.
For the first 10 months of fiscal 2026, net interest totaled $931 billion and the cumulative deficit reached $1.799 trillion, already above all of fiscal 2025 with two months still remaining.
Hartnett argues investors remain calm because they expect policymakers to protect growth and stocks, even as high yields, widening deficits and tariff-refund-driven revenue hits erode the Treasury's position.
If extreme bullishness is masking America's $50 trillion debt trajectory, what unexpected economic shock could suddenly make bonds the only safe haven left?
With US interest costs exceeding $1.4 trillion, what hidden trigger could collapse the stock market's reliance on endless government deficit spending?
As 61% of US debt matures by 2028, how will the looming refinancing cliff impact the massive leverage behind today's AI infrastructure boom?